Correlation Between Phoenix Materials and Daejoo Electronic
Can any of the company-specific risk be diversified away by investing in both Phoenix Materials and Daejoo Electronic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Phoenix Materials and Daejoo Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phoenix Materials Co and Daejoo Electronic Materials, you can compare the effects of market volatilities on Phoenix Materials and Daejoo Electronic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Phoenix Materials with a short position of Daejoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix Materials and Daejoo Electronic.
Diversification Opportunities for Phoenix Materials and Daejoo Electronic
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Phoenix and Daejoo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Materials Co and Daejoo Electronic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejoo Electronic and Phoenix Materials is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Phoenix Materials Co are associated (or correlated) with Daejoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejoo Electronic has no effect on the direction of Phoenix Materials i.e., Phoenix Materials and Daejoo Electronic go up and down completely randomly.
Pair Corralation between Phoenix Materials and Daejoo Electronic
Assuming the 90 days trading horizon Phoenix Materials Co is expected to generate 1.15 times more return on investment than Daejoo Electronic. However, Phoenix Materials is 1.15 times more volatile than Daejoo Electronic Materials. It trades about -0.03 of its potential returns per unit of risk. Daejoo Electronic Materials is currently generating about -0.05 per unit of risk. If you would invest 99,400 in Phoenix Materials Co on September 3, 2024 and sell it today you would lose (29,900) from holding Phoenix Materials Co or give up 30.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phoenix Materials Co vs. Daejoo Electronic Materials
Performance |
| Timeline |
| Phoenix Materials |
| Daejoo Electronic |
Phoenix Materials and Daejoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phoenix Materials and Daejoo Electronic
The main advantage of trading using opposite Phoenix Materials and Daejoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix Materials position performs unexpectedly, Daejoo Electronic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Daejoo Electronic will offset losses from the drop in Daejoo Electronic's long position.| Phoenix Materials vs. Pan Entertainment Co | Phoenix Materials vs. Jeong Moon Information | Phoenix Materials vs. Digital Multimedia Technology | Phoenix Materials vs. Lotte Data Communication |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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